Banco Nacional de Cuba v. Sabbatino
376 U.S. 398 (1964)

Annotate this Case
  • Syllabus  | 
  • Case

U.S. Supreme Court

Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964)

Banco Nacional de Cuba v. Sabbatino

No. 16

Argued October 22-23, 1963

Decided March 23, 1964

376 U.S. 398

Syllabus

Respondent American commodity broker contracted with a Cuban corporation largely owned by United States residents to buy Cuban sugar. Thereafter, subsequent to the United States Government's reduction of the Cuban sugar quota, the Cuban Government expropriated the corporation's property and rights. To secure consent for shipment of the sugar, the broker, by a new contract, agreed to make payment for the sugar to a Cuban instrumentality which thereafter assigned the bills of lading to petitioner, another Cuban instrumentality, and petitioner instructed its agent in New York to deliver to the broker the bills of lading and sight draft in return for payment. The broker accepted the documents, received payment for the sugar from its customer, but refused to deliver the proceeds to petitioner's agent. Petitioner brought this action for conversion of the bills of lading to recover payment from the broker and to enjoin from exercising dominion over the proceeds a receiver who had been appointed by a state court to protect the New York assets of the corporation. The District Court concluded that the corporation's property interest in the sugar was subject to Cuba's territorial jurisdiction, and acknowledged the "act of state" doctrine, which precludes judicial inquiry in this country respecting the public acts of a recognized foreign sovereign power committed within its own territory. The court nevertheless rendered summary judgment against the petitioner, ruling that the act of state doctrine was inapplicable when the questioned act violated international law, which the District Court found had been the case here. The Court of Appeals affirmed, additionally relying upon two State Department letters which it took as evidencing willingness by the Executive Branch to a judicial testing of the validity of the expropriation.

Held:

1. The privilege of resorting to United States courts being available to a recognized sovereign power not at war with the United States, and not being dependent upon reciprocity of treatment, petitioner has access to the federal courts. Pp. 376 U. S. 408408-412.

Page 376 U. S. 399

2. The propriety of the taking was not governed by New York law, since the sugar itself was expropriated. P. 376 U. S. 413.

3. This suit is not uncognizable in American courts as being one to enforce the "public" acts of a foreign state, since the expropriation law here involved had been fully executed within Cuba. Pp. 376 U. S. 413-415.

4. The Government's uncontested assertion that the two State Department letters expressed only the then wish of the Department to avoid commenting on the litigation, obviates the need for this Court to pass upon the "Bernstein exception" to the act of state doctrine, under which a court may respond to a representation by the Executive Branch that, in particular circumstances, it does not oppose judicial consideration of the foreign state's act. Pp. 376 U. S. 418-420.

5. The scope of the act of state doctrine must be determined according to federal law. Pp. 376 U. S. 421-427.

6. The act of state doctrine applies and is desirable with regard to a foreign expropriation even though the expropriation allegedly violates customary international law. Pp. 376 U. S. 427-437.

(a) Disagreement exists as to relevant standards of international law concerning a State's responsibility toward aliens. P. 376 U. S. 430.

(b) The political branch can more effectively deal with expropriation than can the Judicial Branch. Pp. 376 U. S. 431-432.

(c) Conflicts between the Judicial and Executive Branches could hardly be avoided were the judiciary to adjudicate with respect to the validity of expropriations. Even if the combination alleged in this case of retaliation, discrimination, and inadequate compensation made the expropriation here violative of international law, a judicial determination to that effect would still be unwise as involving potential conflict with or embarrassment to the Executive Branch in later litigation. Pp. 376 U. S. 432-433.

7. A foreign country's status as a plaintiff does not make the act of state doctrine inapplicable. Pp. 376 U. S. 437-438.

307 F. 2d 845 reversed and remanded.

Page 376 U. S. 400

Primary Holding
If there is no treaty or other agreement governing the matter, federal courts do not have jurisdiction over a dispute concerning another country taking property within its own territory, even if it violates international law.
Facts
A New York corporation arranged to buy sugar from a subsidiary of a Cuban corporation, of which Americans owned most of the stock. However, the Cuban government issued a decree that passed title of the sugar to a Cuban governmental agency. The New York company agreed to pay the proceeds for the sugar to Banco Nacional as a condition of obtaining a Cuban export license. Once it had received the sugar, the New York company broke this promise and instead transferred the funds to Sabbatino, a receiver for the sugar company in Cuba. Banco Nacional pursued a claim in a federal court under diversity jurisdiction for conversion of the proceeds. The lower court ruled that a taking does not convey valid title if it is invalid under international law. It then found that Cuba had violated international law by issuing the expropriation decree and granted summary judgment for Banco Nacional.

Opinions

Majority

  • John Marshall Harlan II (Author)
  • Earl Warren
  • Hugo Lafayette Black
  • William Orville Douglas
  • William Joseph Brennan, Jr.
  • Potter Stewart
  • Arthur Joseph Goldberg
  • Tom C. Clark

The act of state doctrine, articulated in the Primary Holding above, controls both federal and state courts, even though it does not arise from the Constitution or international law. Instead, it arises from the far greater authority of the political branches of government relative to the judicial branches in the area of foreign affairs. If there is a substantial degree of codification or consensus in a certain area of international law, courts may be able to resolve matters arising under it because clear principles can be identified and applied to specific facts. But courts should not develop a principle independently while trying to avoid conflicting with the national interest or international justice. Sovereign immunity and sovereign authority are not the only situations in which the act of state doctrine may arise.

Dissent

  • Byron Raymond White (Author)

Parties are entitled to have a full determination on the merits, and courts may not fail to enforce rights that are granted under international law. The political branches may have greater control over foreign affairs than the judicial branches, but their control is not so absolute that every issue regarding the validity of a foreign act of state is always a political question. The Constitution expressly permits courts to resolve disputes between citizens and non-citizens, between two non-citizens, or between foreign nations and American parties.

Case Commentary

Courts generally reserve matters of foreign relations for the executive branch, since this is a core power of the President under the Constitution. However, matters of international law that are less central to foreign relations may be more susceptible for the judiciary to handle.

Disclaimer: Justia Annotations is a forum for attorneys to summarize, comment on, and analyze case law published on our site. Justia makes no guarantees or warranties that the annotations are accurate or reflect the current state of law, and no annotation is intended to be, nor should it be construed as, legal advice. Contacting Justia or any attorney through this site, via web form, email, or otherwise, does not create an attorney-client relationship.

Disclaimer: Official Supreme Court case law is only found in the print version of the United States Reports. Justia case law is provided for general informational purposes only, and may not reflect current legal developments, verdicts or settlements. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or information linked to from this site. Please check official sources.